When one has made mistakes the importance which is attached to them depends upon the gravity of the consequences. This being the case, the stones of cooperatives which follow are worth attention, for, as a result of their mistakes, they are now dead. One of the most pitiful aspects of cooperative failures is that one group after another will go on making the identical mistakes that have brought ruin to others. Sometimes it is the result of sheer ignorance, and sometimes of shameful negligence. In either case the result is the same—the stockholders lose their savings and cooperation feels the blow.

Two years ago the State authorities were called upon to investigate a cooperative that was about to fail. Several members made the claim that the officers had defaulted with property of the association. An accountant was called in to examine the books. After considerable coaxing the secretary-treasurer unearthed them and turned them over. They consisted of an old black bag full of all the bills, vouchers and other scrap paper for the previous six months! Those were his books. He had sold the store without taking an inventory. When an inventory was finally made it was found that some of the stock had not turned over for a year. On one top shelf two hundred pepper shakers full of pepper stretched half the length of the room. Full value had been paid for this dead stock and several hundred dollars to boot for "good will." From the cooperative standpoint the most dangerous thing was that half the directors had become disgruntled and, though remaining on the Board, refused to attend meetings. A quorum could not be obtained and for months the president and treasurer had run the business without reference to directors or stockholders. The cooperative society failed and every cent of the four thousand dollars of the cooperators was lost.

Another cooperative store, this time in the Bronx, was taken over by the manager within one year. Upon inquiry its directors proudly exhibited its books. It was a beautiful set costing, they said, nearly seventy-five dollars. The store had started in November. For November and the first three days of December everything was kept in good shape. But during the entire next year not an entry had been made. The directors had the books, but the manager had the store. The stockholders lost all their capital.

A thriving business was being done by still another cooperative store in New York. At the outset the directors had voted to bond the manager. But the matter was put off and put off. One day the manager disappeared and with him two thousand dollars belonging to the cooperative. After a few months the manager was found, but the money was gone. The loss of the total sum was more than the cooperative could stand, however, and after struggling along for a few months, it closed its doors.

A clever organizer two years ago started organizing a cooperative store in New York. On the society's letter heads he had printed a picture of the world and across the world the word "BIG." He was going to start a whole chain of stores. In three months the first and only store was put into the hands of an assignee and the man left the city. An audit of his accounts showed that he had collected $3,600. One-fourth of this had gone for promotion expenses, $2,350 for rental, fixtures, etc., leaving only $350 for operating expenses. Where the Finns spent three-tenths of one per cent for promotion he had spent twenty-five per cent. This had forced the association to start with so small an operating capital that it was soon badly embarrassed for lack of funds and could do nothing but close its doors.

It would be possible to go on with many other illustrations. Such failures as these are not really a test of genuine cooperation. Any ordinary business with such management would also have failed. But it is significant that most of the recent cooperative failures have been among grocery stores. In this particular business the margin of profit is so small that only the most skillful and economical management can bring success. A recent survey of all the private grocery stores in one city showed that the average annual profit was only $400 per grocer.

There is no longer any excuse for cooperatives to follow the blind into the pit. There are many sources of information and advice available to cooperatives that should be fully utilized before any money is spent in a cooperative enterprise that promises only failure.